NLRB challenges at-will employment language in handbooks

Few stances have riled employers this summer more than the National Labor Relations Board’s (NLRB) position that employee handbooks with language about at-will employment may violate the National Labor Relations Act (NLRA). This position, which Kent Jones, an attorney with Nixon Peabody in San Francisco, characterized in an interview with SHRM Online as “a terrible stretch,” applies to all employers -- unionized or not.

The NLRB floated this theory in a pair of cases earlier this year at the Phoenix regional office.

In a complaint mailed to Hyatt Hotels Feb. 29, 2012, regional director Cornele Overstreet faulted the company for having an “overly broad and discriminatory acknowledgment form in its employee handbooks” in violation of employees’ NLRA right to organize.

The offending language stated, “I understand my employment is ‘at will.’ This means I am free to separate my employment at any time, for any reason, and Hyatt has these same rights. Nothing in this handbook is intended to change my at-will employment status. I acknowledge that no oral or written statements or representations regarding my employment can alter my at-will employment status, except for a written statement signed by me and either Hyatt’s executive vice-president/chief operating officer or Hyatt’s president.”

In a settlement reached before a hearing in May, Hyatt agreed to rescind and revise the at-will provision, according to David Ritter, an attorney with Neal, Gerber & Eisenberg in Chicago, who represents employers in labor relations matters.

In the other case, an administrative law judge for the NLRB in Phoenix concluded in February 2012 that similar handbook language violated the NLRA (American Red Cross Arizona and Lois Hampton, 28-CA-23443 (Feb. 1, 2012). After this decision, the case was settled and Red Cross did not pursue an appeal, said David Woodard and Laura Russell, management attorneys for Poyner Spruill in Raleigh, N.C.

The cases received little attention until NLRB Acting General Counsel Lafe Solomon stated at the Connecticut Bar Association’s annual meeting June 11, 2012, that at-will handbook provisions prohibiting any change in the terms and conditions of employment except in a written document with a company executive violate the NLRA’s Section 7 right to participate in union-organizing activities, said Renée Jackson, an attorney with Nixon Peabody, in an Aug. 8, 2012, interview. Since then, the NLRB’s controversial stance has been subjected to a firestorm of employer criticism.

‘Time bomb’

“This language has been around in most employee handbooks for the better part of 30 years. Only within the last year has it been construed to affect Section 7 rights,” Jones said.

In the late 1970s and early 1980s, cases surfaced in which employees claimed that their bosses’ off-hand remarks changed their at-will status to a job for life. That type of claim was enough to get to a jury, so employers started adding language to their handbooks saying that employees’ at-will status could be altered only by a written document with specified company executives.

If the NLRB’s position ever reaches a court, Jones doubts that it would be upheld, unless it were before a more liberal appeals court such as the 9th U.S. Circuit Court of Appeals. Nevertheless, he said that if the NLRB pursues this stance beyond the Phoenix region “it’s a time bomb.”

More relevant agency

The NLRB’s argument is based on the assumption that if employees unionize they can alter the terms and conditions of employment, Ritter explained.

Last year and this year, the NLRB has sought “ways to be more relevant, reaching out to a nontraditional base,” he said. “It’s wading into areas that only involve nonunion employees,” such as with its controversial report on social media policies, which has challenged common policy language.

It’s not time to panic over this stance though, he noted, emphasizing that it’s surfaced in complaints “in just one regional division at the NLRB.”

So Ritter wouldn’t recommend that employers strike handbook at-will language clarifying that the terms and conditions of employment may not be verbally altered. The risk of harm in not having this language is “greater than the risk the NLRB will file an unfair labor practice charge,” he concluded.

Savings clause

But employers might consider adding a savings clause, “stating that the at-will disclaimer does not, and is not intended to, interfere with, limit or relinquish an employee’s right to join with others to work toward altering the terms or conditions of his/her employment, including at-will status,” Woodard and Russell said.

“Based on Mr. Solomon’s public statements on this issue, as well as the position taken by the NLRB in the two cases discussed above, it appears likely that the NLRB will continue to look for opportunities to assert that at-will disclaimers interfere with or chill the right of employees to engage in protected concerted activity in violation of the NLRA,” they remarked.

“Of course, as a business decision, some employers may not choose to do this,” added Scott Silverman, an attorney with Akerman in Tampa, Fla. “Such a statement would amount to a notification to employees of these rights, and employers may decide to wait and see how the NLRB’s efforts play out in the courts.”

Allen Smith, J.D., is manager, workplace law content, for SHRM.

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